CHAPTER ONE
1.1INTRODUCTION
By no means can all purchases and suppliers matter be
dealt with by correspondence
and telephone. It is therefore a necessity that face to face counters sometimes take place to resolve problems
and differences which id be overcome by
negotiation.
This research work looks at negotiation as an important
tool in ensuring effective buying in a construction company.
It is important to recognize that the primary task of
purchasing manager in fulfillment his role of maintaining suppliers is
through effective negotiation.
The purchase manger should be a specialist in satisfying
the needs of the company by seeking suitable sources of supply and
negotiating to secure the best terms and service possible negotiation is necessary whenever it
is require reconcile two or’ more different
opinion in order that action “may be initiated continued in mutual agreed condition.
It is very important that all buying and selling
transaction leave both parties satisfied and hence negotiation is
not forcing and unwilling acceptance.
Though negotiation is complex and costly, but it is use
for primarily for naira value purchase. For high Naira value purchases,
where five criteria which dictate competitive bidding prevail. Though
competitive bidding is only used to narrow down the number of supplier
which implies dealing with a few successful bidder.
1.2 AIMS AND OBJECTIVES OF THE CASE STUDY
The aims and
objectives of carrying out this research work is divided into two: The primary
and secondary objectives. The main aim
which is the primary objective of carrying out this research work is in the
partial fulfillment of the requirement for the award of National Diploma (ND)
in Purchasing and Supply. Awarded by the
department of Purchasing and Supply, Institute of Finance and Management
Studies.
The second
objective is to identify various contributions of purchasing department of
Bulletin Construction Company, Ilorin, Kwara State towards the
organization survival.
1.3 STATEMENT OF THE PROBLEM
Negotiation
with suppliers is one of the most important functions of purchasing department. The success or failure of an
organization depends largely on the effectiveness and efficiencies of
the buyers to negotiate with suppliers on
terms and conditions of the contract such as price, quality, delivery services
etc. However investigations have shown that the purchasing departments of the
company are not given free hand to
operate in the procurement of materials
for the organization. Though the role of buyer in any organization is to contribute immensely to the profitability and
realization of objectives of the organization. But during the economic recess
the market becomes unsuitable a fluctuation in prices. A very good
example is what is happening currently in Nigeria
with reference to deregulation of Naira as a result of which purchasing power
of Naira was drastically reduced.
The
activities of buyer in this situation become need with
i) What
Procurement procedure could be applicable for this situation? And this could include any
of the following
a)
Speculative purchase
b) Hand
to mouth purchase
c) Spot
purchase
d) Time budgeting of purchase
ii)
How to obtain the right quality and quantity
of goods at the right times?
iii)
How can (he right or fair price could he
achieved?
iv)
How
could the right materials or goods he gotten from this right source
or location?
1.4
SCOPE OF THE STUDY
The research
work will cover a broad area in purchasing operation and procurement
procedure in organization.
It entails the following specific area which
the research would like to emphasize upon in the course of writing the project.
These include contract negotiation supplier relationship and others, buyer’s
role in negotiation, objective of negotiation, creating conducive
environment during the course of negotiation. In consolidation with the above
areas the research or will give various definition of terminology used in the
course of the project work.
1.4
LIMITATION AND CONSTRAINTS
The researcher encountered numerous problems during thecourseof carrying out this research work; some of the problems
include the following. The
uncooperative attitude of personnel of the commercial department of the organization who felt reluctant in the first
instance in providing necessary and required information to the researcher not
until a letter of identification was produced.
Among other limitation and constraint, to this research work includes
financial .constraint, limited text book
and journal related to the topic and time available for the research work which hard compelled the researcher to combine
academic programme and at the same time carry out the research.
1.5 SETTING OF HYPOTHESIS
Hypothesis is a tentative guess postulated
for the purpose of assisting the researcher in directing his thinking
towards the solution to the research problem.
In carrying out the research, the researcher
will use both null (Ho) and alternative (HI) hypothesis to find out
whether negotiation is a vital tool to effective buying.
Ho, proper negotiation does not necessarily
lead to effective buying in
a construction company.
HI, proper negotiation is inevitable to effective buying.
1.6 HISTORICAL BACKGROUND OF THE CASE STUDY
Bulleting Construction Company limited is a
duly registered company. In corporate in Nigeria in 1989, the company
which is owned by both indigenous and foreign partners has operated
responsibility with the lanes of Nigeria.
The
company’s head office is in Ilorin the Kwara State Capital with branch offices all over the Federation from Kogi
State to Deltal State, from River
State to Bauchi state and making further rapid cursion into other state of the Federation.
As a responsible specialized corporate entity
with a group of highly responsible indigenous and foreign technical crew, the
company has had the honour of handling numerous construction Works both
within and outside the state. The company future is very promising
as this can readily be assessed through its many tangible and intangible
assets.
Despite the present economic downturn in the country
which has forced many organizations out of the business the company still
forging ahead with work force about (679) six hundred and seventy
nine workers, of this number (674) six hundred and seventy four are Nigerians.
However, the staffs of the company are well
pay and motivated hence the company has contributed into small measure to
social economic development ‘Nigeria.
This analysis has become imperative to show
the Nigerian government that Bulletin Construction Company is a well
established responsible corporate body operating within the frame work of the
Nigeria law.
1.7
DEFINITION OF TERMS
1)
Purchase
Order: This is
the document used
by purchasing department
to request for the supply of certain items from the vendor or
supplier.
2)
Competitive Bidding: This
is used for standard items in which the quotation will
requested from the vendor.
3)
Negotiator: Is a person
authoritatively appointed to represent a company for
negotiation he must be skilful and have a broad business
experience.
4)
Negotiation: – Is a process of
planning reviewing and analyzing used by
a buyer and
a seller to
reach acceptable agreement
or compromise. These agreement and compromise include all
aspect of the business transaction not just price.
5)
Vendor: An outside
supplier of raw
material who suppliers equipment
or services needed in operation of an organization
6)
Purchasing: is a continuous
managing process that is responsible for the anticipation, identification and the
provision of goods and services that are required by an organization
with the objective of helping it to increase its profitability.
7)
Specification: This is the
document which describes in details the requirements to which the supplier or
services must conform.
8)
Spot Purchase: Is the purchase that is made on impulse.
9)
Hand to Mouth Purchase: The
buying of the exact quantity of materials needed only with out stocking.